Final HIPAA Portability Rules

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Final HIPAA Portability Rules
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What is HIPAA Portability?

• Interim rules initially issued by the Internal
  Revenue Service (IRS), Center for Medicare and
  Medicaid Services (CMS), and Department of Labor
  (DOL) in 1997
• The HIPAA portability rules allow workers to
  change jobs and group health plans more easily
  without being denied benefits under the new
  health plan because they had a pre-existing
  health condition.
• More specifically, the HIPAA portability rules
  place limits on the ability of group health plans
  or health insurance issuers (such as an insurance
  company or HMO) to include a pre-existing
  condition exclusion in their plans, and then,
  based on the exclusion, deny benefits because the
  person has a pre-existing condition.

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Specifications

• Effective for plan years beginning on or after
  July 1, 2005
• The Final Rules do not significantly modify the
  HIPAA Portability interim rules issued in 1997

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Overview

• Changes and clarifications to the 1997 interim
  rules include
• Clarification on definition of Dependent
• General Notice of Pre-existing condition
  exclusion
• Limitations on Pre-existing condition exclusions
• Creditable coverage including certificates
• Special enrollment periods
• Excepted benefits

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Definitions

• The final rules add a clarification definition of
  dependent. A dependent is any individual who
  is or may become eligible for coverage under the
  terms of a group health plan because of a
  relationship to a participant.
• In other words, for the purposes of HIPAA, the
  definition of dependent in a group health plan
  document determine who is or is not a dependent.
  For example, plan terms control the age at which
  a child of a participant ceases to be eligible
  for coverage as a dependent.

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General Notice of Pre-existing Condition
Exclusion

• Provides clarification of the requirement of a
  general notice explaining the pre-existing
  condition exclusion of a plan
• Must be provided at the same time as written
  application materials are distributed for
  enrollment by the Employer.
• Must be provided prior to imposing the exclusion
• The information provided in the SPD is not
  sufficient to satisfy this requirement
• Must contain a contact title and phone number
• Sample language is provided that an Employer can
  use as a basis for their own notice there is no
  requirement to use the sample language.

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Limitations on Pre-existing Condition Exclusions

• Retains the general definition of a pre-existing
  condition as in the interim rule
• Clarifies that an exclusion is any limitation or
  exclusion of benefits relating to a pre-existing
  condition
• Clarifies that the required notice informing an
  individual that a pre-existing condition
  exclusion period will apply to him/her must
  identify the last day on which the pre-existing
  condition exclusion applies to the individual.

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Creditable Coverage

• Specifies the following count as creditable
  coverage
• Foreign country public health coverage
• The State Childrens Health Insurance Program
  (CHIP)
• Coverage from a state or federal penitentiary
• Plans maintained by the U.S. Government
• Clarifies a Plan may not impose any limit on
  amount of time an individual has to present a
  certificate or other evidence of creditable
  coverage
• This does not prevent a plan from denying a claim
  under a pre-existing condition exclusion to
  comply with applicable claims regulations.
• Once a claim has been denied, other laws (such as
  503 of ERISA) may set forth timing rules for an
  individual to appeal a denied claim.

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Creditable Coverage (Continued)

• Requires a change to certificates of creditable
  coverage to include information notifying
  individuals of their rights under HIPAA. A model
  statement is included in the final rules.
• Requires an automatic certificate be issued when
  an individual reaches the maximum lifetime limit
  on all benefits
• Deleted the term insurance so that ANY coverage
  provided by a governmental entity is creditable
  coverage without regard to whether it has
  risk-shifting or risk-distributing
  characteristics of insurance.

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Creditable Coverage (Continued)

• Requires that procedures for requesting
  certificates be in writing
• Certificate of Coverage must be in writing,
  however, the final rules
• Allow creditable coverage information to be
  provided by other means (such as by telephone)
  when requested by the plan participant to supply
  information to another plan (and the other plan
  agrees)

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Creditable Coverage (Continued)

• Includes two examples on counting a significant
  break in creditable coverage
• Tolling a significant break under Trade Act of
  2002
• This amended COBRA to allow a second opportunity
  to elect COBRA for those individuals who qualify
  for trade adjustment assistance but did not
  initially elect COBRA
• The days between the date coverage was lost and
  the first day of the 2nd COBRA election period
  are not counted as a significant break in
  coverage
• Tolling a significant break in the individual
  market
• Refers to the case of individuals seeking
  coverage in the individual market
• This does not apply to a group health plan

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Special Enrollment

• Clarifies what constitutes a loss of eligibility
  for special enrollment rights to arise
• Conditions for special enrollment
• Loss of eligibility for coverage as a result of
• legal separation, divorce, loss of dependent
  status, death of employee, termination of
  employment
• an individual no longer resides, lives, or works
  in the service area and no other benefit package
  is available
• an individual incurring a claim that would meet
  or exceed a lifetime limit on all benefits
• a plan no longer offers benefits to certain
  classes of individuals (e.g. part-time employees)

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Special Enrollment (Continued)

• Conditions for special enrollment (continued)
• Termination of Employer contributions
• Exhaustion of COBRA Continuation Coverage
• Loss of Medicaid does not create a special
  enrollment period

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Special Enrollment (Continued)

• Provided model notice of Special Enrollment
  period that must be provided on or before the
  time an employee is offered the opportunity to
  enroll
• Restates that if an employee/dependent enrolls as
  a late enrollee or special enrollee, any period
  before such late or special enrollment is not a
  waiting period
• In other words, the date of enrollment for
  late/special enrollees is used in determining the
  beginning and ending of a look-back period and
  the beginning of a pre-existing condition
  exclusion period

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Excepted Benefit Plans

• Retains rule that the following benefits are
  excepted from compliance with portability
  requirements
• Accident only or accidental death and
  dismemberment
• Disability income coverage
• Liability insurance (including auto and general
  liability)
• Supplemental coverage
• Workers compensation
• Automobile medical payment insurance
• Credit-only insurance (e.g., mortgage insurance)
• Coverage for on-site medical clinics

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Excepted Benefit Plans (Continued)

• Retains rule that limited-scope dental benefits,
  limited-scope vision benefits, or long-term care
  benefits, if not an integral part of a group
  health plan, are excepted
• Clarifies the definition of integral with two
  requirements
• Participants have right to elect not to receive
  coverage for the benefit, and
• If coverage is elected, participant pays an
  additional premium or contribution for that
  coverage

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Partnerships Clarified

• Health plans sponsored by partnerships are
  subject to the HIPAA portability rules, even if
  the plans only cover business partners and are
  considered exempt from ERISA. Business partners
  are considered employees for HIPAA portability
  purposes.

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Available Resources

• Final Rule (available in PDF format)
• Federal Register, December 30, 2004
• http//a257.g.akamaitech.net/7/257/2422/06jun20041
  800/edocket.access.gpo.gov/2004/pdf/04-28112.pdf

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Questions?

• If you have any questions or need any
  assistance, please contact
• JI Specialty Services, Inc.